A Massive Fire and a Mass of Confusion: Enka v. Chubb and the Need for a Fresh Approach to the Choice of Law Governing the Arbitration Agreement

Abstract

Listen

Translate article

The recent judgment of the Supreme Court of the United Kingdom in Enka v. Chubb has provided an answer, at least provisionally, to the thorny question of how the proper law of an arbitration agreement is to be determined under English law. The majority of the Supreme Court (in a 3–2 split) held that in the absence of an express or implied choice of law by the parties, the ‘default rule’ should be that the arbitration agreement is presumed to be governed by the law of the arbitral seat, as the law ‘most closely connected’ to the arbitration agreement. Yet the Supreme Court’s reasoning is not wholly satisfying, and the two dissenting judgments present powerful arguments for taking a contrary approach. This article proposes a means to sever this enduring Gordian knot: drawing from the in favorem validitatis principle applied by the Swiss, Dutch and Spanish legal systems in determining the substantive validity of an arbitration agreement, we suggest extending this principle to encompass questions of the scope of an arbitration agreement and arbitrability. Under this approach, instead of focusing on determining the proper law of the arbitration agreement, the courts need only ask themselves two questions: (i) does the claim in question fall within the scope of the arbitration agreement, as interpreted under any of the potentially applicable laws, and (ii) is it arbitrable under any of those laws? (UK) Supreme Court, Enka v Chubb, Arbitration agreement, Proper law, Choice of law, Governing law, In favorem validitatis, Favour principle, Arbitral seat/seat of arbitration, Scope of the arbitration agreement